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Norconsult ASA reported its financial results for the fourth quarter of 2024, revealing a net revenue of NOK 2.5 billion, marking a 7% organic growth. According to InvestingPro data, the company maintains a robust 10.24% revenue growth over the last twelve months. Despite this performance, the company's stock experienced a decline, dropping 1.68% to close at NOK 44.7. This movement comes amid a broader stable market, with the company's earnings per share (EPS) and revenue forecasts playing a significant role in investor sentiment.
Key Takeaways
- Norconsult's Q4 2024 net revenue reached NOK 2.5 billion, with a 7% organic growth.
- The company's stock fell by 1.68% in reaction to the earnings report.
- Norconsult remains a market leader in Norway, with a strong focus on renewable energy projects.
- The firm acquired Sigma Civil in Sweden, expanding its workforce and geographical reach.
Company Performance
Norconsult's performance in the fourth quarter of 2024 highlighted its strength in the Nordic design and engineering sector. The company reported a net revenue of NOK 2.5 billion, reflecting a 7% organic growth. This growth was supported by robust cash flow from operations, totaling NOK 938 million, with nearly 100% cash conversion. The firm's focus on renewable energy projects, such as the upgrade of the Hemsil hydropower dam, underscores its strategic direction.
Financial Highlights
- Net Revenue: NOK 2.5 billion (7% organic growth)
- Adjusted EBITDA: NOK 227 million (9.1% margin)
- Profit After Tax: NOK 498 million
- Full Year Net Revenue: NOK 9.1 billion
Market Reaction
Following the earnings release, Norconsult's stock price decreased by 1.68%, closing at NOK 44.7. Based on InvestingPro Fair Value calculations, the stock appears fairly valued at current levels. Analyst consensus shows potential upside, with target prices ranging from NOK 41.8 to NOK 44.9. The stock remains within its 52-week range, with a high of NOK 45.5 and a low of NOK 25.25, suggesting a potential for recovery as market conditions stabilize. InvestingPro's Financial Health Score of 2.81 (GOOD) supports the company's solid fundamental position.
Executive Commentary
CEO Egil Hogna emphasized, "We are one of the leading Nordic design and engineering companies," highlighting Norconsult's strong market position. He also noted the importance of hydropower in renewable energy projects, stating, "Hydropower is extremely important when we build more intermittent renewable energy sources." These comments reflect the company's commitment to sustainable development and market leadership.
Risks and Challenges
- Market Competition: Increasing competition in the renewable energy sector could impact Norconsult's market share.
- Economic Uncertainty: Fluctuations in the global economy may affect public sector spending, which accounts for over 50% of the company's revenues.
- Recruitment Challenges: As demand for renewable energy expertise grows, attracting and retaining skilled personnel remains a priority.
- Regulatory Changes: Changes in environmental regulations could affect project timelines and costs.
- Currency Fluctuations: As a Nordic company, Norconsult is exposed to currency risks that could impact financial results.
Norconsult's strategic focus on renewable energy and its strong market position in the Nordic region position it well for future growth, despite the current challenges in the market.
Full transcript - Norconsult ASA (NORCO) Q4 2024:
Egil Hogna, CEO, NorsConsult: Good morning, everyone, and welcome to Neuwirth Consulth's Fourth Quarter Presentation for twenty twenty four. Four. My name is Egil Hogna. I'm the CEO and today's presentation will be by our CFO, Doug Fladby and myself. Please enter questions in the chat if you are watching this as a webcast and we will have questions and answer at the end of the presentation.
I'm happy to be able to announce another strong quarter for NorsConsult with steady growth and improved underlying profitability. We start with the front page showing one of our NorsConsult award winners, which is Tolboden in Trondheim. It's a rehabilitation project which was fairly complex, but with a very nice result in terms of a finished project. For those of you who are new to NOR Consult, I'd like to give you a quick reminder of who we are. We are one of the leading Nordic design and engineering companies, the market leader in Norway and we have six reporting segments: the Norwegian head office, the regions, Sweden, Denmark, Renewable Energy and finally Digital and Technogarden.
A bit more than half of our revenues are from the public sector and we have three main markets: buildings and architecture, infrastructure and finally energy and industry, roughly one third each. We have 6,500 employees spread around 140 offices and we have a financial history of steady growth and steady profitability and that includes the last year as well. In the fourth quarter, we showed stable growth and a slightly improved underlying profitability. Our net revenues increased to approximately NOK 2,500,000,000.0 and we showed 7% organic growth adjusted for a small calendar effect. In terms of our bottom line, the adjusted EBITDA increased from NOK209 million to NOK227 million giving an EBITDA margin of 9.1%.
When adjusting for the fact that there was a slightly lower or less working time in the fourth quarter this year, the calendar effect adjusting for that gives us a EBITA margin of 9.7%. In the quarter, we had a strong cash flow from operations of NOK $938,000,000, which is a substantial increase from the same quarter last year. And finally, the Board of Directors proposed to the General Assembly a dividend of NOK 1.7 per share. The picture shows one of our large projects. This is a project called Rogfest, which will become the world's longest underwater road tunnel, 27 kilometers long, dual tunnel and it will be three ninety meters below sea level at the deepest level showing our engineering expertise.
In terms of people and organization, we ended the year with approximately 6,500 employees. That's up from six thousand three hundred one year ago. Our sick leave decreased slightly from four point seven percent to four point five percent while we saw a slight increase in the employee turnover. In November, we distributed 13,000,000 shares to employees as part of the gift shares in connection with the IPO one point five year ago. The slight increase in employee turnover we think is probably related to the fact that the lockup up period relating to those shares ended in November.
Still our turnover is lower than our peers are having in the Nordic sector. We also have two new members of the corporate management team in the company. Hakon Berjeksson was appointed new EVP for Renewable Energy from the February 1 And as our Head of the Danish Operations have resigned, the former Head of Nordic Denmark, which has shown some remarkable results, Jess Sernsen has been appointed interim EVP from the May 1. We also received for the first sorry for the third consecutive year a Gesell award in Denmark for both remarkable growth and profitability while Norconsult Sweden again was nominated a career company demonstrating its demonstrating our attractiveness to students and young professionals. In connection with our one year anniversary on the stock exchange, we have made a short video where some of our colleagues are explaining why they work for Norconsult.
Simon Mortensen, Analyst, DNB: Mobilize resources and take, and use new technologies and workflows, like for example, AI. Is the opportunity to shape
Martina, Analyst, Nordea Markets: the future
Simon Mortensen, Analyst, DNB: of our built environment.
Martina, Analyst, Nordea Markets: And
Egil Hogna, CEO, NorsConsult: as you can see at the end of this video, one of our colleagues mentioned the fact that in our consult virtually everyone are also shareholders of the company, something which we think contributes to a unique culture and alignment with shareholder interests. In the fourth quarter, we announced our acquisition of Swedish company Sigma Civil. In February, the company the acquisition was completed and the employees integrated. In total it's four offices and 125 employees who will be integrated in our existing office structure in Sweden. Sigma Civil has specialized in infrastructure, environment, project management and construction and will nicely complement our existing activities in Sweden.
This acquisition is very much in line with our growth strategy to increase our local presence and skill base in the Nordic region. When it comes to the market, it has been fairly stable in the fourth quarter of last year. In Buildings and Architecture, we continue to see a somewhat weak private market, but there are signs of optimism. And for this quarter, I would like to highlight both Sweden and Denmark where we have seen a number of positive developments. The public market is very much stable and we see a growing demand relating to defense related projects.
Infrastructure has also been very much stable, both transportation and the water infrastructure activities are based on public investment plants, which are running at a steady pace. And there is more spending when it comes to rehabilitation and upgrading compared to previously. We see a somewhat smaller number of very large projects being initiated in the market, but the total number of projects is increasing meaning that there is a higher number of smaller to medium sized projects. Energy is still the market area where we see the strongest demand. This is linked to electrification and the strong demand
Doug Fladby, CFO, NorsConsult: for in particular
Egil Hogna, CEO, NorsConsult: renewable energy. That also creates a need for renewable energy. That also creates a need for transmission and here there is, as I said, a strong demand. Other industries are more varied.
Doug Fladby, CFO, NorsConsult: Some industries are
Egil Hogna, CEO, NorsConsult: doing very well, Some industries are doing very well, while other industries are affected by commodity prices, for example, which are different in different industries. Then I'd like to focus on hydropower. I mentioned previously that energy and in particular renewable energy is where we see the highest demand. And Norconsult's origins back to 1929 was hydropower and it continues to be a stronghold for our company. On this page, we see a picture from a project we do for Hafslen called Hemsil and this is a project initiated in order to increase the power associated with the dam on the increase the power associated with the dam on the picture in order to compensate for intermittent energy sources like wind and solar.
Norway and Sweden combined are in many ways a superpower when it comes to hydropower. Hydropower is extremely important when we build more intermittent meaning variable sources of renewable energy like wind and solar. The great thing about Norway and Sweden is that we already have about 3,800 hydropower plants which are able to give quite a bit of flexibility to our power sources. The total The total energy production from hydropower in Norway and Sweden is about two ten terawatt hours and it constitutes 88% of the Norwegian production capacity and 40% of the Swedish. In order to support the power needs and the power network, the market today is focusing on increasing the installed capacity for higher output when power is needed during periods of less wind and less sun.
Improved pumping means that dams are possible to use even more as batteries increasing their storage capacity. And then we work on modernizing and upgrading the existing facilities and strengthening the power transmission capacity between different sources of power. Norconsult's services to customers are for example environmental studies, permitting and compliance projects. It's concept studies, feasibility studies, detailed design and construction supervision for dam and hydropower projects. And it is concept and feasibility studies for pumped storage and rehabilitation and upgrade projects.
On the picture you see one of our projects in The UK called Crookken, where we have a project for pumped storage. And pumped storage is also coming to Norway and Sweden. And here we see a picture from a project called Hulen which we do for Utterakraft in collaboration with Oenergy and Skagerrak. This is a feasibility study for a large scale pumped storage plant in Bykla, Norway. Then moving on to some of our other projects.
Here we have an example of a small project which we recently have done in Thirisal. It's called Thirisalknewten which is the conversion of a flood protection area into a beautiful and very popular playground for the local community in Tiresil. And this was also a winner of an Orkonsult award for small scale high impact last month. Other projects which have been initiated this quarter is for example the following at the Westfall and Solan railway lines where we are working on implementation and preparation for the European rail traffic management system, a new signaling system going to support safety and the productivity of our railway system. Another project example is a new road on the West Coast Of Norway at Pemblo Seven Point Five kilometers with, for example, two new bridges and extensive sea filling and blasting work.
And finally, I'd like to mention that we have won two important framework agreements in Norway and Denmark. The one in Norway is actually six regional framework agreements. The one in Denmark is a national one. We are already seeing that activity here is picking up quite a bit. And we are well positioned to support the Nordic defense ministries and organizations for the necessary ramp up of infrastructure in The Nordics.
And with that, I would like to give the word to our CFO, Doug Flaudbi, who will take you through the financials.
Doug Fladby, CFO, NorsConsult: Thank you, Egil. Fourth quarter was a quarter with steady growth and net revenue, which ended at SEK 2,500,000,000.0, up from SEK 2,330,000,000.00. The organic growth was 7%, including the adjusted for the calendar effects, which was minus SEK 17,000,000 in the quarter. The growth was driven by higher number of FTEs and also increased billing rates. Looking at the billing ratio, it's SEK 72.2 slightly down from the same quarter last year, still affected by a weak building and architecture market.
And that is also affecting Norway region the most. Our EBITA ended at SEK $227,000,000, up from SEK $2.00 9,000,000, where we have an adjusted or underlying EBITA margin of 9.7%, up from SEK 9. The increase in margin is basically driven by improved billing rates, but also partly mitigated by lower billing ratio and also slightly higher personnel expenses. Also this quarter, we have one off expenses related to the gift share program of million. This is the last quarter we have that kind of a one offs since the shares were distributed November.
Profit after tax CHF203 million, up from CHF74 million. And also employee of the gift shares, which we have a tax deduction on. And the estimated effect on that is CHF 55,000,000. A short look at 2024, where we have net revenue of SEK 1,190,000,000.00, up from SEK 8,500,000,000.0. And organic growth adjusted for the calendar is 7%.
The calendar effect was minus minus million in 2024. And looking on that and the growth was driven by improved billing rates and also increased FTEs. Our billing ratio was still weak. It was 72.5 that is down from 73.5% due to a weak building and architecture market throughout the year. Our EBITA at CHF $879,000,000, up from CHF $810,000,000, where we have an underlying margin of 10.1%, up from CHF 9.5 And the improved margin is mainly due to increased billing rates and also some effects from cost efficiency measures, but partly mitigated then by lower billing ratio and slightly higher personnel expenses.
The one off costs for the employee share program or the gift shares was million during 2024, which leaves us then with a profit after tax of CHF $498,000,000 versus CHF $516,000,000, meaning that the profit after tax, of course, affected the was, of course, affected by the employee share program, the gift share program of SEK285 million. A short look at the quarter four contributors on EBITA before we deep dive into the segments. Two segments are contributing positively this quarter, that is Sweden and Denmark, while four of the segments are at the same level in terms of EBITA and Digital and Technogarden is slightly lower, which which I will come back to later. On the right side, you see the negative calendar effect of SEK 17,000,000, which is relating to Sweden and Denmark in this quarter. And then into segments, we start with Norway head office, where we have a net revenue of SEK758 million, up from SEK700 million.
The organic growth is 6% adjusted for the calendar effect, which is actually nothing in the quarter. The growth is driven by higher number of FTEs and also increased billing rates. EBITA CHF 83,000,000 at same level as last year, while the EBITA margin is now 11%, slightly down from CHF 11 point 9 percent same quarter last year. Solid project performance and also increased billing rates was partly mitigated by slightly higher personnel costs. So that's the main reason for the slight decline in margin.
Looking at the full year for Norway head office, we have a strong year with organic growth of 8% and also an increased underlying margin to 12.6%, up from 11.7%. So a strong year for Norway head office. Then moving to Norway region where the net revenue ended at 7.21%, up from $667,000,000, an organic growth of 8% in the quarter, which is driven by increase in FTEs and also billing rates. The EBITA was SEK 41,000,000 at same level as the same quarter last year and a slightly lower margin of 5.7% versus CHF 6 point 1 percent. We have positive improvement in margins due to billing rate increases.
However, the billing ratio is still low in region and that is partly mitigating that increase. For the full year, we have organic growth of six percent in Norway region and underlying margin of 8.9%, which is a decline from 10.5%. And this is mainly due to a weak building and architecture market during 2024 and hence a low billing
Simon Mortensen, Analyst, DNB: ratio in region.
Doug Fladby, CFO, NorsConsult: Then moving to Sweden. And Sweden continues with strong organic growth of 14%, mainly driven by higher number of FTEs and also increased billing rates. The calendar effect in the quarter was minus SEK 13,000,000. EBITA ended at SEK 55,000,000, up from SEK 40,000,000. And the main improvement is due to that we have positive effects from the senior recruitments we did last year.
They are now into black figures. And also we have positive development in billing rates and also also billing ratios. And remind you that quarter four last year also had a negative effect due to the senior recruitments of SEK 9,000,000. The margin underlying margin 14.9% up from 10.3% in the quarter. Meaning that Sweden is having a strong development in 2024 with an organic growth of 14% and also continued increase in underlying margin now at 9%, up from 7.5%.
In Denmark, the organic growth was 7%, driven by higher billing ratio and also some write ups in fixed price projects. We have EBITA of CHF 24,000,000, an improvement from CHF 14,000,000 the same quarter last year, mainly due to operational improvements, but also some effects due to that expenses for lever penalty was SEK3 million this quarter, while the same quarter last year it was SEK8 million, so a positive effect of SEK5 million. Renewable energy continues strong. The organic growth was 7% and that was mainly driven by hydropower and transmission due to more FTEs increased billing rates and also stable high billing ratio. Looking at the FTEs for end of the quarter, we have four seventeen FT feet feet feet feet feet feet feet feet feet feet Es at the end of the quarter.
That is down from four forty at the same quarter last year. And the main explanation for that is that we have sold out three international subsidiaries, Indonesia, Mozambique and Botswana. And we also have slightly lower FTEs in Poland. The sold units does not contribute significantly to the EBITA. Meaning that the organic growth in terms of FTEs in hydropower and the remaining part is still growing at a good pace.
EBITA at CHF 33,000,000, same level as last year, still strong margins of CHF 15 point 5 percent, slightly down from last year. And for Renewable Energy, the 2024 was a strong year, 14% organic growth and also increased margin ending at 16.8%. And finally on segments, Digital and Technogarden where the gross revenue decreased by 3%, where there is a mix where Technogarden is increasing gross revenue due to more use of sub consultants, while digital are decreasing gross revenue due to fewer FTEs on the consultant part. In terms of EBITA, the EBITA is eight percent eight million and decline in EBITA margin to 4.5%. And here we see an improvement in digital due to the measures we have done during the year, while by reducing FTEs and the cost base and also part of the improvement is a slight improvement due to capitalization of development cost.
In Technogarden, we have lower profitability in this quarter. That is mainly due to more use of subconsultants and also change in the project portfolio. Then into cash flow and cash flow from operation in fourth quarter was strong. We have a cash flow from operation of SEK $938,000,000 mainly due to improvement of working capital. The same the comparable quarter the same quarter last year was SEK392 million, so nearly SEK450 million improvement.
Part of that improvement was with the withholding tax related to the gift shares distributed in November. SEK '1 hundred and '60 million was then paid out in for with the holding tax in January. If you look at the full year cash from operation, we have a cash conversion of nearly 100% also adjusted for the SEK160 million. So strong cash flow from operation. Cash flow from financing activities minus SEK98 million versus SEK638 million the same quarter last year and that is mainly explained by the extraordinary dividend of nearly SEK 600,000,000 paid out in quarter four twenty twenty three.
The balance sheet is strong. We have cash and cash on market securities of SEK 1,600,000,000.0. But keep in mind that SEK 160,000,000 of these are with the headwind tax, which are paid out in January. Our leverage ratio is one minus SEK 1.79 deducted for the IFRS 16 leases. And I will also like to point out a negative working capital of SEK $318,000,000.
And with strong cash flow and also strong balance sheet, the board has proposed a dividend of SEK 1.7 per share for 2024. That is up from SEK 1.2 in 2023. Our dividend policy is to pay out more than 50%. And as we have also communicated historically the last years, we have paid out between 6080%. And if the payout ratio this year is 103%, but if we take out the one off costs related to the gift shares, it is in line with the historical payout ratio of 76%.
The order book at the end of the quarter SEK 6,400,000,000.0, fairly stable versus quarter three and SEK 200,000,000 up from the same quarter last year. The order intake in the quarter has been at satisfactory level, a good combination of smaller project, medium size and also larger projects. In addition to the framework contracts, which only are included in the the order backlog when we have call offs of the framework contracts. And finally, from my side, as always a reminder of the seasonality in the business. And I would like to highlight the average working days on the bottom right here.
In 2025, it's the same amount of working days as in 2024. However, there are big differences between the quarters. And since there's also differences between the quarters, it will be financial impact also for 2025. In quarter one, we have three more calendar days versus the same quarter last year. And that will give a positive estimated effect for us of SEK124 million.
While in quarter two, since the Easter is in quarter two this year, we have three calendar days less and that has an estimated effect of minus SEK135 million. So even though the calendar days are the same, the first half, we have a negative effect first half of estimated SEK11 million. And by that, Tegan, I give the word to you.
Egil Hogna, CEO, NorsConsult: Thank you very much, Doug. Let's talk a bit about the outlook. But first a few words about the picture. The picture is from another one of our renewable energy projects. This is called Daniehlewatten and was the winner of the Sustainability Award in the Norco Salt Awards ceremony last month.
This is a project in order to rehabilitate a very large dam in Norway and where the method of rehabilitation has taken particularly well care of the environment and the nature in connection with the rehabilitation. When it comes to the outlook, the overall market is expected to be quite stable. But as I think we all know, there is quite a bit of both macroeconomic and geopolitical uncertainty for the time being. We continue to see small signs of improvement in buildings and architecture. And I mentioned previously that in the last quarter, we saw this particularly in Sweden and Denmark, but we also see these signs in Norway.
Infrastructure is expected to continue to have stable demand. And again, we expect the strongest activity within energy and in particular renewable energy. Other industries, we expect to continue to be mixed, but one of the benefits of Norconsult's business model is that we are organized according to But as Doug mentioned, there But as Doug mentioned, there are always some areas where we do see the need for improvement. Both during the fourth quarter and during the first half this year, we will continue to take measures to ensure a good underlying profitability and maintaining our efficiency. And if we look at the fourth quarter results, I think where we saw that there was a need for some further action was in Norway regions and Technogarden.
So there, there will be some actions taken during the first half of this year. With that, I conclude the presentation and we are now happy to take questions and we will start with the audience. And I see Simon Mortensen's hand from DNB. Would you like to start? Sure.
Please wait for the microphone.
Simon Mortensen, Analyst, DNB: Hi. Yes. It's Simon here. The tax in the quarter is a positive gain. You commented a bit about the changes and impacts on the working capital, but can you please elaborate a bit of what's the quarterly impact through the P and L given the result effect it had in the quarter?
Doug Fladby, CFO, NorsConsult: The tax effect, you mean? Yes. Yes. This is a tax deduction from the Gift Share program, which is estimated to around NOK 55,000,000 in positive tax since we distributed the gift shares in fourth quarter. So the positive effect is NOK 55,000,000 on bottom line.
Simon Mortensen, Analyst, DNB: Thank you. And any guidance on the tax cost for 2025? Will there be any kind of similar one offs or anything going forward?
Doug Fladby, CFO, NorsConsult: I think it's fair to say that average tax rate approximately 23% going forward.
Simon Mortensen, Analyst, DNB: The competitive situation in the market, one of your peers, actually two of them have commented that the price competition on billing rates have started to increase the last quarter and half year, especially in not in certain building areas, etcetera. Can you please give us your take on those trends and if you recognize the same comments?
Egil Hogna, CEO, NorsConsult: I think it is fair to say that we have had strong competition also during the previous years. What is a little bit new now is that we see some pickup in the Buildings and Architecture segment. And traditionally, the Building segment is where the number of competitors is the largest and often where the level of price competition is the highest as a consequence of the very large number of competitors. So as this segment is now picking up, I think it's fair to say that in that segment we see a strong competition. But all in all, I'm not sure if we see a large change in the level of price competition.
Simon Mortensen, Analyst, DNB: Thank you.
Egil Hogna, CEO, NorsConsult: Yes. Okay.
Martina, Analyst, Nordea Markets: Martina from Nordea Markets. I have four questions, if it's okay. Do you have any more comments on your increased turnover apart from what you said in the presentation?
Egil Hogna, CEO, NorsConsult: Well, we see a slight increase in employee turnover, and we saw that in the fourth quarter. I think during the IPO, we had a, let's say, particular share program associated with the IPO, the so called gift shares, where people had to remain for a year after the stock exchange in order to receive those gift shares. I think that means that some people who might have considered changing employer waited with that until the fourth quarter. We do not expect to see any sustained higher turnover relating to that. We had also our employee our annual employee survey during the fall and it continued to show a very good score.
So we are very much convinced that our employees continue to be very happy with working at NOR Consult.
Martina, Analyst, Nordea Markets: Good. And also about the development in a billing ratio going forward into 2025. Would you expect to, for example, the large amount of defense project, would that be able to offset some of the weaker parts in the building and architecture market? Or would we see a similar level as in 2024?
Egil Hogna, CEO, NorsConsult: I think we are also taking actions in our organization where we see there are pockets of low billing ratio. So I'm not sure we are not taking anything for granted in terms of increased defense related activity sort of solving any challenges associated with this. We are dealing with it adjusting capacity to demand where we find that to be necessary. So all in all, I would like to say that we have a strong focus on the billing ratio every quarter, and we are taking the necessary measures independently of how the market is developing.
Martina, Analyst, Nordea Markets: Perfect. And on the billing rates, you had a still continuing development similar as in Q3. Do you see that also now into Q1 in 2025?
Egil Hogna, CEO, NorsConsult: Would you to comment on that, Alta?
Doug Fladby, CFO, NorsConsult: The index regulation are slightly lower than last year in the Nordic market and especially. So the interest rates, which we will gain from index regulation on contracts lasting more than a year, will be slightly slower than we have seen in 2024.
Martina, Analyst, Nordea Markets: And the last one. It was about the amortization impairment where a lot was related to the Technogarden, approximately 5%. Can you comment on that?
Doug Fladby, CFO, NorsConsult: Yes. That is related to digital actually. And it's a write down on some software, which we have developed some years ago.
Martina, Analyst, Nordea Markets: Perfect. Thank you.
Magnus Rasmussen, Analyst, SEB: One question from me as well. Magnus Rasmussen, SEB. You spent NOK 50,000,000 on CapEx related to Property, Plant and Equipment. Can you just elaborate on what that is and whether that will continue going forward?
Doug Fladby, CFO, NorsConsult: I think it was slightly higher than normal this quarter and I guess that's the reason for asking. This was also some technical equipment related to project, which we invested in this quarter. So I don't expect 50 to be the running pace going forward. It's more at historical levels.
Magnus Rasmussen, Analyst, SEB: Thank you.
Johansen, Analyst, ABG: Thank you, Johansen, ABG. Two questions, if I may. If we look at the Renewable, the divestments and what seems to be a small restructuring in Poland, did you have any restructuring charges? That's one question. And I think you're alluding to that you're looking at capacity in certain segments in Technogarden and Region Norway, could we see some restructuring charges related to that for the first quarter?
And finally, on the dividend, should we look at the payout ratio related to ex gift shares or reported earnings per share? So 76 or 100?
Doug Fladby, CFO, NorsConsult: Yes. So I'll start with the last one first. Reason for taking for mentioning the 76 is that we had one off costs. So I think it's more to underline that this is more the normal level between sixty and eighty if we don't have acquisitions, which need quite much funding. So it's more a normal level of 60 to 80%.
So even though the reported was 100%, we felt that the normalized taking the one off cost related to gift share was a way to show it. And
Egil Hogna, CEO, NorsConsult: then Poland restructuring.
Doug Fladby, CFO, NorsConsult: Then Poland restructuring. Now that is actually people who have left the company, therefore competitors. So no restructuring cost as such. The other international subsidiaries which we have sold that is minor business. And we have decided to close down that exposure in these countries because it's limited business.
So no restructuring cost on that as well.
Egil Hogna, CEO, NorsConsult: And the final question you had was relating to Technogarden and regions Norway, whether we could expect special costs there associated with restructuring. Previously, we have had some smaller restructuring, for example, in Nordic Denmark, Nordic Norway and in digital, those costs have been fairly small. And the actions, which I alluded to now, are also not of a large magnitude. So we are talking fairly small amounts. But I wanted to mention it as there is always a little bit of that kind of, let's say, ongoing adjustments, which could be necessary in different parts of the business.
Doug Fladby, CFO, NorsConsult: Questions from the web.
Jesper Stugumo, Analyst, Handelsbanken: So we have Jesper Stugumo from Handelsbanken. There's been a continued strong profitability improvement in the Swedish market. Are you gaining market shares in Sweden in some areas? And how much headroom do you have for continued price hikes in Sweden and Norway?
Egil Hogna, CEO, NorsConsult: We have gained market share in Sweden. That is correct, both through organic growth and most recently associated with the acquisition of Sigma Civil. I wouldn't really characterize the situation in Sweden as a situation based on price hikes. There is a lot of competition in Sweden, but we have been able to do well in that competition and we expect to continue to do that. When it comes to the situation going forward, our CFO mentioned that the annual index regulation this year is less than what it was last year.
And in combination with, as was mentioned previously, some price competition in the buildings and architecture market in particular, I don't think it is realistic to expect the same total degree of price increases for the coming year compared to the previous year.
Jesper Stugumo, Analyst, Handelsbanken: Right. Thank you. Then we have another question, which is how competitive is recruitment in the renewable energy sector? Can you manage to ramp up in the course of the year within energy? And what are your expectations for the group?
Egil Hogna, CEO, NorsConsult: During 2024, we have been very successful with recruitment in the Norwegian Renewable Energy business. The fact that you saw FTEs reduce in that segment was due to reductions outside of Norway in the divestment of some subsidiaries in Mozambique and The Philippines and also a reduction in Poland. So we are very successful in terms of recruitment in the Nordic renewable energy business, and we expect to continue to be that going forward.
Jesper Stugumo, Analyst, Handelsbanken: Thank you. Another question here is, how should we look at the potential margin dilution from Sigma Civil in Sweden?
Doug Fladby, CFO, NorsConsult: Yes, and I answered that. As mentioned earlier, the Sigma Civil, they had a loss making operation in 2024. We have established good integration plans to both improve the cost efficiency and also to improve, you can say, billing ratio loss since they are starting from, you can say, a loss. But we will have quite fast cost reductions as house rents are negation they will move into our offices.
Jesper Stugumo, Analyst, Handelsbanken: Right. And then we have Johan Sunden from Carnegie. You mentioned that there's been better activity within building and architecture in a few geographies. Can you give some more color on which local regions where there's been better activity within the various countries?
Egil Hogna, CEO, NorsConsult: Well, I can mention that I'm in particular impressed with our architects in Denmark. There we see a significant lift in activity and performance. And also our Swedish architects are doing very well. So I'd like to highlight those two, even though there are also other positives.
Jesper Stugumo, Analyst, Handelsbanken: And then can you also clarify what the changes in the project portfolio in Technoguard mean?
Doug Fladby, CFO, NorsConsult: Yes. That's different clients and different markets. So it's we have three different markets. It's consultant, it's IT and it's also the Swedish part. So it's a mixture between the clients in these market areas.
Egil Hogna, CEO, NorsConsult: Yes. We have, for example, seen a drop in the Swedish car industry, which is one of the impacts Technogarden has had.
Jesper Stugumo, Analyst, Handelsbanken: Thank you. That concludes the questions from the web.
Egil Hogna, CEO, NorsConsult: Okay. And I yes, I see one more question here.
Magnus Rasmussen, Analyst, SEB: One more question from Magnus Rasmus in SEB. You mentioned that price index regulations will be lower in 2025 than in 2024. Does that also apply to wage increases and other cost increases?
Doug Fladby, CFO, NorsConsult: That remains to be seen. Obviously, the development in the economics in the different countries and how the forefront, I can say, negotiation will start and will also have also affect our salary increases, but it's too early to say.
Magnus Rasmussen, Analyst, SEB: Thank you.
Egil Hogna, CEO, NorsConsult: Okay. Then I see no more hands. So that concludes our fourth quarter presentation. Thank you very much for following us and see you next time. Thank you.
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